Financing Your Child's Healthcare

Options for Financing Your Child's Health Care

Caring for a child with special health care needs can be financially overwhelming. There are programs to help, but the rules are often confusing. If your health insurance does not cover what is needed or your family has no insurance, these resources may help:
  • Medicaid
  • Medicare
  • Children's Health Insurance Program (CHIP)
  • Health Insurance Marketplace (HealthCare.gov)
  • Social Security Benefits
  • State Title V CSHCN Programs
No matter what insurance or funding you have, it’s a good idea to keep track of your child’s medical records and the contact information of the people you talk to about your child’s coverage. Document all of your conversations and messages in a log so you can look back at them when you need to. School records are also vital to keep, especially if your child has an IEP or 504 (see Definitions & Terms). See Care Notebook for medical, home, and school record-keeping tips, sample forms, and examples of how to build a record-keeping system that works for you and your child.

Medicaid

Medicaid is a federal health insurance program. Each state is in charge of administering it to those who meet certain requirements. The requirements include categories, such as age or being pregnant, disabled, blind, or elderly. Within those categories, there is other criteria that includes income, resources (bank accounts, property, or items that can be sold for cash), and whether you are a US citizen or a legal immigrant. Rules about income and resources differ by state and by category/group. Medicaid may cover medical care up to 3 months before applying.

Specific Medicaid Programs

Early Periodic Screening, Diagnosis and Treatment (EPSDT)

Early Periodic Screening, Diagnosis and Treatment (EPSDT) is a federal law and “safety net” for children over 21. It requires Medicaid to cover certain health services, including immunizations, hearing, vision, dental screenings, and necessary treatments for physical or mental illnesses diagnosed by a doctor or screening process. See Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) for more information.

Medicaid Home and Community-Based (HCBS) Waiver

Medicaid Home and Community-Based (HCBS) Waiver programs provide medical services (e.g., health care, dental services, skilled nursing) and non-medical services (e.g., respite care, case management, and environmental modifications) to those who qualify. States determine how many to serve in a waiver program. Eligibility is based on the income of the person with special needs, not the family's income, meaning more children with disabilities can be eligible for Medicaid Waiver services. See Medicaid Home and Community-Based Services (HCBS) for more information.

Excess Income Programs

People who meet criteria for Medicaid but have incomes above the allowed amount may apply for the Medically Needy or Spend-Down program (also called the Excess Income program). This program allows them to receive benefits by paying the "excess" monthly income back to Medicaid for a portion of their medical bills. For detailed guidelines, see Medicaid Excess Income Program. For state-specific information, see State Medicaid Programs and the Resources section at the bottom of the page.

Medicare

Medicare is federal health insurance for people 65 or older and those who have received Social Security disability benefits for at least 2 years. A child receives Medicare immediately if he or she has:
  • A chronic renal disease and needs a kidney transplant or maintenance dialysis
  • Lou Gehrig’s disease (ALS - amyotrophic lateral sclerosis)
See the Medicare Interactive website for eligibility information.

Children’s Health Insurance Program (CHIP)

CHIP enables states to provide health insurance to children from working families with incomes too high to qualify for Medicaid but without access to affordable private health insurance. The program covers primary care, prescription drugs, vision, hearing, and mental health services. Each state has its own eligibility rules. For more information, go to Insure Kids Now or call 1-877-543-7669 or 1-877-KIDS-NOW.

Health Insurance Marketplace

The Health Insurance Marketplace (also known as the Health Insurance Exchange) is part of the Affordable Care Act. It is for Americans looking for private individual and family plans, with cost assistance for those who are income-eligible. You can use the marketplace if you:
  • Don’t have insurance or access to affordable, quality, employer-based insurance
  • Make less than 400% of the Federal Poverty Level and don’t have access to employer-based insurance
See Income Levels & Savings (HealthCare.gov) for more information about income qualifications.
If you make less than 133% of the Federal Poverty Level, you will qualify for Medicaid if your state expanded Medicaid.
You may apply for coverage during yearly open enrollments to access cost assistance. If you qualify for a special enrollment period or are looking to see if you qualify for Medicaid or CHIP services, you may apply any time. See Health Insurance Marketplace (HealthCare.gov) for more information.

Social Security Benefits

Your child may be eligible for Social Security programs described below.

Supplemental Security Income (SSI) Payments for Children with Disabilities

Supplemental Security Income (SSI) makes monthly payments to people with low income and limited resources who are 65 or older, blind, or disabled. Children younger than 18 years can qualify if they meet Social Security’s definition of disability for children (see Understanding SSI for Children) and their income and resources fall within the eligibility limits. SSI considers your child’s income and resources, as well as those of family members living in the child’s household. To be eligible, your child must:
  • Not be working or earning more than the specified amount set by Social Security, which may change each year as cost-of-living increases
  • Have a physical or mental condition or a combination of conditions that results in “marked and severe functional limitations.” This means it seriously limits your child’s activities.
  • Have a condition or conditions that has lasted or is expected to last at least 12 months or result in death

When Your Child Turns 18 - SSI for Adults

For the SSI program, a child becomes an adult at age 18 and different eligibility rules apply. As an adult, family income and resources are no longer considered; only the young adult’s income and resources count. Also, the criteria for adult disability is different than that for a child. If a child has SSI and turns 18, he will need to re-apply based on adult criteria after his 18th birthday. As an adult on SSI, you are considered your own “household” and may qualify for other government programs. See Understanding SSI and Other Government Programs for more information.

Social Security Disability Insurance (SSDI) Benefits for Adults Disabled Since Childhood

These are benefits for children under the age of 18 based on the work record of a parent who is collecting retirement or disability benefits from Social Security, or survivors benefits payable to children under the age of 18 on the record of a parent who has died.
Although children under age 18 who are eligible for these benefits might be disabled, they do not need to consider their disability to qualify them for benefits.
Note: A child can continue receiving dependent or survivor benefits until age 19 if she is a full-time student in high school.

Social Security Benefits for Adults Disabled Before Age 22 (SSDI)

The SSDI program pays benefits to adults who have a disability that began before the age of 22. The SSDI benefit is considered a “child’s” benefit because it is paid on a parent’s Social Security earnings record. The SSDI disabled adult “child” benefits continue as long as the individual remains disabled. For a disabled adult to become entitled to this “child” benefit, one of his parents must:
  • Be receiving Social Security retirement or disability benefits; or
  • Have worked long enough under Social Security and died
You can get more information about these programs at Social Security Administration.

State Title V CSHCN Programs

Under federal law, every state has a Title V/CSHCN program to assist children with disabilities or chronic conditions and their families. The federal Social Security Act of 1989 requires states to “provide and promote family-centered, community-based, coordinated care … for children with special health care needs … and to facilitate the development of community-based systems of services.” Funded with federal and state dollars, Title V programs help ensure that children and youth with special health care needs receive necessary services and program assistance. Each state’s agency and program name can differ. For more information about the program in your state, go to State Title V Profiles and Contacts.

Other Financial Supports

Federal Income Tax Credits

The Internal Revenue Code (IRC) includes several tax credits for which parents with disabled or special needs children might be eligible, including but not limited to:
  • Health Coverage Tax Credit
  • Earned Income Tax Credit
  • Child Tax Credit
  • Dependent Care Tax Credit
  • Tax Credit for the Disabled and Elderly
Tax credits reduce your tax liability and sometimes lead to a refund. This may also apply to parents of adult children with special needs. Each credit has its own set of rules. A tax advisor or the IRS should be consulted to determine eligibility. See Internal Revenue Service.

Tax-Advantaged Financial Accounts (FSAs, HSAs, and HRAs)

An FSA (Flexible Spending Account) can be set up through some employers’ benefit plans. The account allows you to set aside a portion of your earnings to pay for qualified expenses. Most commonly, FSA funds are used to pay for medical expenses, but they can often be used for childcare. The money you put into an FSA is not taxed; however, you must use the funds by the end of the benefit year; they do not roll over to the next year.
An HSA (Health Savings Account) is another type of tax-advantaged medical savings account for taxpayers enrolled in a High-Deductible Health Plan (HDHP) (PDF Document 67 KB). Like an FSA, you do not pay federal tax on these savings. Unlike the FSA, you are not required to spend all of the money, and unspent money will roll over to the next year. HSA funds can be used to pay for medical expenses at any time, including some over-the-counter medications and health products.
An HRA (Health Reimbursement Account or Health Reimbursement Arrangement) is an IRS program that allows an employer to set aside funds to reimburse medical expenses paid by participating employees. Using an HRA yields "tax advantages to offset health care costs" for both employees and employers. According to the IRS, an HRA "must be funded solely by an employer," and contributions cannot be paid through a voluntary salary reduction agreement. There is no limit on the employer's contributions, which are excluded from an employee's income. The employer decides if the funds are rolled over from year to year.
Check with the IRS and your employer’s benefit plan to learn which expenses would be covered and which plan makes the most sense for you. US Department of the Treasury Health Savings Accounts explains more about these accounts.

ABLE Accounts

The Achieving a Better Life Experience (ABLE) Act of 2014 allows for tax-advantaged savings accounts for qualified individuals with disabilities to save for certain expenses, such as education and transportation. Similar to existing “Section 529” education savings accounts, ABLE accounts allow individuals and families to save for disability-related expenses to supplement, but not replace, benefits provided through Medicaid, Supplemental Security Income, the beneficiary’s employment, and other sources. If properly managed, funds in an ABLE account do not jeopardize eligibility for critical federal benefits. With a full understanding of account features, individuals and families can use ABLE accounts as another tool in planning for the lifetime needs of an individual with long-term disabilities. You can learn more at ABLE Accounts.

Special Needs Trust

Another way of providing for your child or adult is through a Special Needs Trust (SNT). Also called a "supplemental care trust," an SNT is a reliable, legal way to ensure that the resources left to your child are available when he or she needs it. An SNT allows your child access to more flexible funds while ensuring that the assets are handled responsibly. To be sure that the money for your child can be used as supplementary income and that public benefits (such as Medicaid or SSI) will continue, the assets must be placed in the SNT and set up correctly. To learn more, see The Pacer Center Special Needs Trusts.

Foundations

Many large health insurance-related companies have foundations to which consumers can apply for financial help. Call your local insurance company or hospital association to learn if they have a foundation or charity care organization that may help with your health care financing needs. One example of such a foundation is the UnitedHealthcare Children’s Foundation that provides medical grants for financial assistance for the family's share of the cost of medical services. For more information, visit UnitedHealthcare Children's Foundation.

Local Organizations

Check local volunteer and social organizations that may be looking for projects and willing to do fund-raising and other charitable tasks. Explain your family’s needs, including a full description of the medical and other needs, and how the funding would help your family.
Examples of organizations are Rotary clubs, Lions clubs, Elks lodges, Shriners Hospitals, scout troops, religious groups, etc.

Resources

Information & Support

For Parents and Patients

National Center for Family - Professional Partnerships (F2F HICs)
Family-to-Family Health Information Centers are nonprofit, family-staffed organizations that assist families of children and youth with special health care needs (CYSHCN). Locate state-based F2F HICs, providing support, information, resources, and training.

Family Voices
A national, nonprofit, family-led organization promoting quality health care for all children and youth, particularly those with special health care needs. Locate your Family-to-Family Health Information Center by state.

Social Security Benefits for Children with Disabilities
An electronic booklet outlining the kinds of Social Security and Supplemental Security Income (SSI) benefits a child with a disability might be eligible for; call toll-free 1-800-772-1213.

Managing Your Finances
An online tutorial from the PACER Center, "Managing Your Finances" includes these modules: Make a Spending Plan, Track Your Spending Leaks, Set S.M.A.R.T. Financial Goals, Manage Your Debt, and Protect Your Identity.

Health Insurance Marketplace (HealthCare.gov)
Sometimes known as the health insurance exchange, the new Health Insurance Marketplace helps uninsured people find health coverage that meets their needs and budget. Part of the Affordable Care Act.

National Disability Navigator
This fact sheet is intended to help Navigators answer specific questions that people with disabilities might ask about benefits and coverage available through the Health Insurance Marketplace, supported by the American Association on Health and Disability (AAHD).

Children's Health Insurance Program (CHIP)
This is the official U.S. government site for CHIP services; information includes eligibility, enrollment and general information about health insurance for kids.

EPSDT Medicaid Benefits for Children
Medicaid's EPSDT benefit provides comprehensive and preventive health care services for children under age 21 who are enrolled in Medicaid. EPSDT is key to ensuring that children and adolescents receive appropriate preventive, dental, mental health, and developmental, and specialty services. Early and Periodic Screening, Diagnostic, and Treatment (EPSDT)

Social Security Administration
Official site for the U.S. Social Security Administration; offers programs including disability benefits (SSDI) and Supplemental Security Income (SSI).

State Title V Profiles and Contacts
Title V programs by state with contact information. Association of Maternal and Child Health Programs

ABLE Accounts
State-sponsored tax-favorable ABLE accounts for people with disabilities who became disabled before age 26.

Services for Patients & Families Nationwide (NW)

For services not listed above, browse our Services categories or search our database.

* number of provider listings may vary by how states categorize services, whether providers are listed by organization or individual, how services are organized in the state, and other factors; Nationwide (NW) providers are generally limited to web-based services, provider locator services, and organizations that serve children from across the nation.

Authors & Reviewers

Initial publication: September 2014; last update/revision: January 2021
Current Authors and Reviewers:
Author: Gina Pola-Money
Reviewers: Tina Persels
Dale-Marie Herring
Authoring history
2014: update: Tina PerselsR
2012: revision: Alfred N. Romeo, RN, PhDR
2003: first version: Robin PrattA
AAuthor; CAContributing Author; SASenior Author; RReviewer